The Federal Housing Delivery System
I. Summary
Whether the tax dollars Congress provides for funding housing assistance
achieve the goals Congress intends for those dollars depends significantly upon the
system that delivers them. Since the need for assistance so significantly exceeds its
supply, the delivery system must allocate the assistance available in meaningful
amounts to the areas of greatest need within a state, regardless of political subdivision
boundaries. It must value cost-effective outcomes over a preoccupation with rule
making, but be sophisticated and responsible in its operations and fully accountable for
its results.
For those reasons, the Commission strongly recommends that: (i) any new
federal program of housing assistance be administered directly by the states; (ii)
existing federal housing assistance programs be improved, selectively increased, and
more fully delegated to state and local government administration; and (iii) new tools
be created to pool existing federal program resources at the state level and to facilitate
access to such resources by local governments for place-based community
development.
II. The States Should Administer Any New Housing Assistance Program
The federal government can best conduct some housing programs, such as fair
housing enforcement and the nationwide FHA mortgage insurance programs.
Experience, however, has repeatedly demonstrated what intuition strongly suggests:
that state government is better able than the federal government to judge and balance
housing needs throughout each state and to administer assistance effectively to meet
those needs.
Modern management practice and actual experience with federal efforts to
deliver housing assistance argue strongly against the top-down command and control
approach, which has traditionally dominated federal housing assistance administration.
Perhaps attempting to compensate for prior failures, federal housing administration
also too often bogs down in seemingly interminable rule making and counterproductive
micromanagement.
Despite its best efforts, the federal government’s failure to deliver housing
assistance effectively has been nowhere more distressingly demonstrated than in the too
frequent TV images of a recent HUD Secretary blowing up federally financed high-rise
public housing and in his successor’s high profile allegations of maladministration in
HUD and corruption in housing financed by HUD programs.
The Commission finds the case for limiting new housing funds to state
administration to be compelling for at least four reasons.
First, only statewide government is in a position to judge and allocate the
assistance to the most pressing needs, wherever they exist in each state, in amounts
sufficient to make a difference. Housing needs in cities, suburbs, and rural areas do not
often exist in isolation from one another. Moreover, housing needs, job and commercial
development, transportation burdens, health care availability, human services
demands, and other neighborhood development requirements flood across city and
county political boundaries, sometimes across broad areas of a state. These interrelated
needs cannot be addressed as fairly, effectively, or efficiently by a proliferation of
individual political subdivisions acting alone as by the kind of overall statewide
planning and administration in the state-administered Housing Credit program.
The states are uniquely positioned. They are close to real local issues and
housing needs, but have enough perspective to bring a state and regional focus to
problems that cannot be solved within individual municipal boundaries. States are in
an unparalleled position to ensure that the federal funding available for housing
assistance is applied where it is most needed and is integrated with other public
investments in our physical, economic, and human infrastructure.
Second, dividing into more than 50 parts whatever additional housing funding
Congress is likely to provide would dilute those funds in many places to too little to be
effective. Housing production is expensive. The median first-time home cost is
$125,000. The President estimates his proposal for state administration of subsidies to
provide 100,000 new single-family homes in distressed areas will cost $1.7 billion
during the next five years. The current FHA multifamily insurance program limits
recognize that apartments built for moderate-income renters cost as much as $147,000
each or more.
The funds potentially available for any new housing assistance program under
any reasonably anticipated budget scenario will be too scarce to be divisible among
more than the 50 states, if relative needs in all parts of each state to are to be considered
and prioritized adequately, and the funds available marshaled to meet them.
With an annual $5 billion in Housing Credits, $2 billion in HOME and CDBG,
$13 billion in Housing Bonds, and other state-provided assistance, state agencies
already administer the great preponderance of all federal and state housing production
funds. Through these programs, states have already underwritten and financed more
than 2.2 million affordable apartments and 2.6 million first- time homebuyer mortgages.
2
The total $4 billion that the CDBG and HOME programs annually provide local
governments, however, is distributed under an entitlement formula to more than 1,000
localities in CDBG and more than 525 in HOME. That fractionalization makes these
programs very popular among a broad base of local governments, but distributes funds
without regard to consideration of or prioritization among statewide or even regional
needs and in shares frequently too small to address whatever needs exist even in the
county or city receiving them. Entitlements are as little as $200,000 in CDBG and
$500,000 in HOME, compared to the $2 million annually Congress has set as minimum
amount of Housing Credits necessary to produce meaningful results in even the least
populous states.
Congress was well aware of the CDBG entitlement jurisdiction funding formula
when it created the Housing Credit. Instead of following such a formula, Congress
limited Housing Credit administration to the state level, the only possible way to bring
always-too-scarce federal assistance to bear in the most comprehensive, coordinated,
cost-effective fashion on the most pressing multifamily production problems wherever
they exist in each state.
Third, only state government has the capacity in every state to administer
sophisticated multifamily financing. State housing agencies possess statewide focus,
sophisticated finance, underwriting, and asset management capacity, and a multidecade record of responsibility, effectiveness, accountability, and success in
administering tens of billions of billions of dollars of housing assistance. They are
investment grade rated.
In fact, state housing agencies are the only point in the entire federal system
where all federal and state housing resources—Housing Bonds and Credits, HOME,
Federal Home Loan Bank advances and other GSE programs, FHA insurance, and stateprovided funds—can be accessed in one place and brought to bear on housing needs.
Fourth, federal oversight capability can be more effectively concentrated on 50
entities than in programs spread among hundreds of states and larger municipalities,
such as the 590 in HOME and 1,050 in CDBG, a point which HUD itself recently
recognized in limiting to the states the delegation of its Section 8 project-based contract
administration.
The Commission recognizes that the dual state-local administration of HOME,
CDBG, and Housing Bonds is based on political compromises struck years ago. Though
the Commission does not propose overturning those compromises, it recognizes that
the Supreme Court’s “one-man-one vote” rule has, for nearly half a century, provided
urban and suburban areas representation at the state level equal to actual population
and, thereby, has rendered the argument for such compromises obsolete.
3
Fractionalizing housing assistance in the 21st century into hundreds of local
entitlements, without regard to the overall needs of a state, cannot be justified,
particularly in light of the decade and a half experience with statewide Housing Credit
administration. In fact, the record of state administration of both Housing Bonds and
Credits has made them the popular housing programs in Congress. Last year’s
legislation, which enlarged the Housing Bond and Credit programs by 40 to 50 percent,
had greater cosponsorship than any other bill in Congress—more than 80 percent of
both the House and Senate.
III. Improving Existing Federal Housing Assistance Programs
Congress should build on what works. Congress itself invented the two most
popular and effective housing production programs: Housing Bonds and Credits, one
predominantly and the other exclusively administered by the states. It should provide
for delegation in other federal housing programs comparable to what already exists in
the case of Housing Bonds and Credits. It should eliminate unnecessary statutory
barriers in all of them.
The Tax-Based Programs—Housing Bonds and Credits
Through Housing Bonds and Credits, Congress provides tax savings for private
investors in affordable housing production, under specific limitations on the total
annual amounts invested and under other conditions regarding their use.
Housing Bonds: The federal tax exemption on Housing Bond interest leads
investors to accept a lower rate of return than if such bonds were taxable. Bond issuers
pass that interest savings on as a discount rate on single-family and multifamily
mortgages. The Housing Bond program, which generates $15 billion a year to finance
lower first-time home purchases and apartments at a cost of about $1 billion annually to
the federal government, is the nation’s largest and most cost-efficient housing program.
Some of the limits the federal government has placed on the Housing Bond interest
exemption, however, are obsolete and counterproductive, pointlessly reducing amounts
available for housing and interfering with its effective delivery.
Congress should exempt Housing Bonds from the volume cap on “Private
Activity Bonds” (bonds involving private ownership, such as housing and economic
development). Alternatively, Housing Bonds should have a separate cap, initially set at
a level significantly increased from their current volume and indexed against inflation.
Even though Congress increased the Private Activity Bond cap in December 2000 to
restore (but not increase) the purchasing power bonds had under it in 1986, the cap puts
4
housing in unequal competition with powerful advocates for other bond uses, such
pollution control and economic development, condemning housing bonds to as little as
25 percent of the cap in many states.
Congress should repeal the so-called “Ten-Year Rule” (which requires that all
repayments of mortgages financed by Housing Bonds outstanding for ten years or more
be used to buy back such bonds instead of being recycled into new mortgages). It
serves no public purpose and is perverse in its effect.
Congress should repeal the MRB purchase price limit, just it did in the Rural
Housing Service (RHS) homeownership programs in 1998. In 1980, Congress imposed
that limit (90 percent of an area’s average purchase price) on the cost of homes Housing
Bonds can finance. That limit became obsolete in 1986, when Congress limited the
maximum income an MRB borrower can have. It became dysfunctional in 1993, when
the Treasury, which Congress authorized to set the limits annually, stopped doing so,
lacking adequate data. Thus, Housing Bonds can finance homes only at 1993 price
levels!
Where states commit to devote funds generated from their tax-exempt bond
activities to other housing related purposes, Congress should eliminate the so-called
“arbitrage rules,” which require issuers to send the Treasury any “profit” or “arbitrage”
(over the bare minimum required to fund the issuer’s operations) generated by the
difference between the rate on their bonds and the rate at which they re-lend the
proceeds. In practice, these rules discourage the intentional generation of most
arbitrage and so produce little revenue for the Treasury. Allowing issuers to generate
arbitrage devoted to other public purpose housing activities will encourage them to
generate new affordable housing funds from those who benefit from Housing Bonds, at
little or no cost to the federal government.
Housing Credits: In 1986, Congress created the Housing Credit to replace
substantially all previous tax incentives for low-income apartment production. The
Housing Credit departed from previous federal housing efforts in two extraordinary
ways. First, Congress vested administration of the entire program in the states, under
Treasury oversight. No traditional federal housing agency has a role. Second, Congress
provided that states can allocate Credits only to developments meeting low-income
rental needs, as defined under statewide plans and only to construct apartments set
aside for 30 years or more for renters whose incomes do not exceed 60 percent of the
area median income.
Congress originally limited the Housing Credit to $1.25 per capita per state
annually, an amount adequate to finance about 100,000 apartments nationwide each
year. Last year Congress increased the Credit to $1.75 per capita to restore the 100,000
5
units per year production level, which inflation-driven cost increases had shrunk to
about 70,000.
Credit production, however, can barely replace the low-income stock lost
nationwide each year to abandonment, demolition, and conversion to higher income
use. Meanwhile, Credit applications in many states continue to vastly exceed the actual
amounts available. Moreover, as the Credit income limits are now structured, Housing
Credit production is impossibly uneconomic in many rural areas.
For these reasons, the Commission recommends that the Housing Credit cap be
repealed or substantially further increased and indexed for inflation and the eligible
income adjusted to make Credit production possible in low income rural areas.
Although the Commission has not dealt with the many technical changes in the
Housing Bond and Credit programs the industry has proposed, the most important
among them in its view—Ten Year Rule repeal, MRB purchase price limit reform, and
the adjustment of the Housing Credit income rules to enable rural development—are
contained in legislation currently before the Congress. One-third of the Senate and over
forty percent of the House already have cosponsored that legislation (H.R. 951 and S.
677), introduced just over six months ago.
Authorized and Appropriated Programs—HOME, CDBG, and Risk-Sharing
Congress provides direct subsidies for affordable housing production through
programs financed from taxpayer-generated funds, like HOME and CDBG, and indirect
subsidies through mortgage insurance and guarantees. The amounts in each program
are limited by annual appropriation acts. Program rules are set by those acts, other
statutes authorizing them, and federal administrating agency regulation.
Among all these programs, FHA/HFA Risk-Sharing, first enacted in 1992,
represents such a relative success story that last year Congress removed the limitation
on the volume of mortgages the program can insure. (The Risk-Sharing program did
not actually get underway until 1996, because HUD, which had opposed the program’s
enactment, refused until then to implement it.)
Under Risk-Sharing, state housing finance agencies, with comparatively minimal
federal regulation, can write FHA multifamily mortgage insurance, and, by pledging a
portion of their own resources as security, use their own underwriting standards in
doing so. So far, the program has insured more than 31,500 apartments, the mortgage
insurance premiums on which have generated a positive return to the Treasury.
6
Unfortunately, most other authorized and appropriated programs suffer from
severe over-regulation. For one thing, congressional distrust of the Executive Branch
peaked during the years many of these programs were created leading Congress to
write program requirements into law which might have been left to more flexible
regulation. Even today, the periodic congressional review of these programs provides a
nearly irresistible attraction for some members of Congress to propose program
amendments based on their own anecdotal experience, but which, even if useful in
some area, create requirements wholly inappropriate to many parts of the country.
Worse, HUD is mired in a culture of over-regulation, micromanagement, and
debilitating delay in decision making, which cannot be justified in terms of quality
outcomes or program objectives.
These tendencies exalt process over product. They generate needless delays,
inject unnecessary inflexibility, raise administrative and compliance costs, and frustrate
private sector and state and local government efforts to access and coordinate programs
to produce the results Congress intended. That erodes congressional support for
additional housing assistance, and, worst of all, squanders the limited resources the
Congress does make available for those who need housing help.
In 1997, for example, Congress created the “mark-to-market” program to save
hundreds of millions of Section 8 subsidy dollars. HUD waited a year to appoint an
administrator for the program, then spent most of another year getting the program
started, including devising a 400-page rule book, much of which had to later be
jettisoned as unnecessary and counterproductive. By the second anniversary of what
Congress intended to be a three-year program, not a single mortgage had been
restructured.
After Congress required HUD and RHS in 1989 to review the total amount of
federal subsidy in each new project proposed for assistance, RHS promptly and
effectively delegated that responsibility in the case of Housing Credit developments to
the states. HUD, however, engaged in an ultimately fruitless three-year process of rule
making and revision, effectively halting HUD financial assistance to Housing Credit
development in the meantime, and finally ending by delegation to the states
comparable to what RHS had done years earlier.
Meanwhile, even the programs Congress specifically intend to be administered
by state and local government often remain mired in red tape. In HOME, for example,
Congress authorized up to $2 billion a year in block grants to state and local
governments to meet lower income housing needs as those states determined them.
Recently, however, HUD engaged in a fruitless multi-year dispute with a state on the
Canadian border about whether garages are appropriate in HOME-assisted housing
there!
7
Over-regulation also leads to negative selection in program administration.
Given a choice in the HOME program, for example, between single and multifamily
rehabilitation, most HOME agencies emphasize single-family, not necessarily because is
more urgent, but because the regulations needlessly make multifamily rehabilitation
more cumbersome and costly.
In contrast, a major reason for the Housing Bond and Credit programs’ success is
the character of their regulation, as tax-based programs, by the Department of the
Treasury. That Department has written and enforced a reasonably limited system of
rules to effectively protect the federal interest in program integrity, quality results, and
accountability, while leaving the states empowered to make the program judgments
Congress intended.
IV. A Twenty-First Century Delivery System
Cutting the Red Tape
The lesson the tax-based programs teach is that both Congress and HUD should
significantly simplify, deregulate, and actually devolve to state and local governments
administration of existing programs like HOME and CDBG. In addition, Congress
should empower state government to work with local governments to coordinate the
resources of both federal and state programs to maximize their accessibility for
community development.
As a practical matter, responsibility for actually delivering the bulk of federal
housing assistance already resides in the states. In addition to Housing Bonds, Housing
Credits, HOME, and CDBG, Congress has authorized most states to underwrite
multifamily FHA insurance in the Risk-Sharing program, to borrow from the Federal
Home Loan Bank System, and to administer the Section 8 mortgage restructuring
program. Under contract with HUD, states administer HUD’s own project-based
Section 8 portfolio. (Qualified local governments can also participate in the RiskSharing program, but only five do, and in FHLB borrowing, but only 10 do).
An administrator’s latitude to fashion independent solutions to a state’s housing
needs varies dramatically, however, among programs. The tax-based programs—
Housing Bonds and Credits—operate under Treasury regulation that protects the
federal interest with clear rules and tough penalties, but leaves program decisions
within those rules entirely to the states. On the other hand, even authorized and
appropriated programs like HOME and CDBG, originally conceived as true block
grants to state and local governments have, at the end of the legislative and regulatory
day, become encrusted with counterproductive federal prescription.
8
For example, the HOME statute requires a 30-day notice to terminate a lease,
even in case of imminent health or safety risks and even though local law allows less. It
also prohibits using HOME funds for public housing modernization or operations.
HOME regulations forbid using HOME funds for refinancing, except for rehabilitation;
forbid using HOME funds for project-based rental assistance; forbid most
predevelopment loans; forbid financing multifamily laundry facilities separate from the
apartment buildings they serve, even where their use is restricted to building tenants;
and forbid using HOME funds for homebuyer education, except for buyers purchasing
with HOME funds.
HOME regulations also forbid using HOME funds to finance owner-occupied
rehabilitation where the home is secured under a land contract, rather than a deed, even
though land contracts are common in some very low-income areas. The regulations
limit non-profit spending on predevelopment loans to a maximum of 10 percent of the
funds advanced to them. They limit the cost of rehabilitation to appraised value, but
count required lead abatement as a rehab cost, even if that prevents funding, by raising
the rehab cost above the appraised value.
None of these and many other HOME regulations and statutory provisions are
required to assure that state and local governments spend HOME funds wisely to meet
the housing needs of individuals with incomes of 80 percent or less of area median, the
purpose for which the HOME program was created in the first place. In fact, such rules
and statutory provisions can inhibit that very outcome in many cases.
Federal statutory requirements and regulations in programs like HOME should
be limited to the rules truly essential to assure that program administrators possess
required capacity, that those to whom and the purpose for which they make funds
available meet the basic eligibility criteria under the statute, and that the purposes for
which HOME funds are expended are actually realized.
Real Delegation
The real federal interest in housing assistance delivery is to get the help provided
to the people Congress intends to help, for the purposes they intended to help them.
Federal housing assistance in both entitlement programs—like HOME and CDBG—and
in competitive programs—like homeless assistance and HOPE VI—should be delivered
under broad performance agreements with HUD.
Those performance agreements should extend for reasonable periods of time,
such as five years, to permit achievement and measurement of the performance goals.
Such agreements should describe the manner in which the administrator intends to use
9
the funds to meet housing priorities and articulate specific goals consistent with the
program’s federal objectives. Those goals should include such objectives as improving
low-income housing conditions, increasing the number of affordable housing units,
reducing homelessness, preserving existing low-cost housing stock, increasing the
number of people attaining self-sufficiency, increasing housing assistance to special
needs populations, and comparable purposes.
HUD should be required to approve such agreements within a reasonable time
after the state or local government submits them, unless within that time, HUD
determines that they do not meet federal statutory requirements and notifies the state or
local government in writing of the deficiencies. (Funding would not be subject to HUDimposed performance measures and benchmarks, many of which might be
inappropriate measures of performance in any given state or locality.)
The
administrators should have a reasonable period of time to revise the agreement and
resubmit it for HUD approval.
Administrators should provide HUD with annual reports of progress toward
meeting performance goals and be subject to periodic HUD program review and audit
to determine if funds are being expended consistent with the agreements.
Administrators in noncompliance should be given reasonable opportunity to correct
deficiencies. Funds would be withheld in cases of failure to promptly correct
deficiencies and potentially be recaptured from an administrator and from those to
whom it loans or grants funds, in cases of significant violations of federal program
purposes.
Improving Access
True devolution of individual housing programs will permit administrators to
address their unique needs in the fashion most cost-effective to resolve them, not
limited by a “one-size fits all” set of rules and priorities designed by strangers
thousands of miles away. Such devolution will speed decision-making and delivery of
assistance to those Congress intends to help.
Regulatory devolution is not, however, a substitute for Congress reviewing the
statutes authorizing the devolved programs, to eliminate unnecessary barriers to their
use individually or in combination with other programs. For example, the statutorily
required eligible income limits, rent limits, application processes, and compliance
requirements in Section 8, HOME, CDBG, and the Housing Credit are all different,
making combining any of those subsidies in the same project difficult to effect and
needlessly costly to administer.
10
Nor will devolution of individual program administration by itself assure that
unnecessary differences on such matters as applications, funding cycles, eligibility, and
priorities among programs are eliminated to the extent practical. Shifting the site of
regulation is not a cure-all for such complexity. Each affected state and local
government will have to take responsibility and initiative toward eliminating
unnecessary barriers to using each program it administers and cooperating with the
administrators of other housing programs to reduce such barriers between and among
housing programs.
States have already shown strong leadership in program access simplification
and coordination, even within the complexities of the present system. A number of
states, for example, have implemented one-stop shopping for housing programs. In
Minnesota, developers can, every six months, apply on a single application for multiple
types of funding from state, local, and non-profit agencies, which all then make
decisions collectively. New Jersey has created software for a paperless, multi-agency,
one-stop shopping by multifamily developers seeking housing assistance, including
Housing Bonds, Housing Credits, and CDBG.
In addition, states are coordinating disparate federal and state resources to
address situations that require more than just housing assistance, pointing the way
toward the possibilities inherent in program devolution and simplification.
Colorado’s housing agency provides homeowner education and first and second
mortgages repaid with Section 8 payments to disabled individuals selected and to
whom supportive services are supplied by the Department of Human Services. A
number of states combine Section 8 and TANF payments with Housing Bonds to
finance low-income families’ home purchases. Multiple agencies in states as diverse as
Michigan and Maine have combined Housing Credits and Housing Bonds with federal
and state funding for health care, disability, and homeless assistance, to produce a
variety of permanent supportive housing and services to address the housing and
service problems of very low-income people, the homeless, the disabled, the mentally
ill, and the elderly.
Many state housing agencies are using Housing Bonds and Credits to help
finance local HOPE VI public housing redevelopment projects. In Maryland, other state
agencies also provide supportive services to HOPE VI tenants, including job training,
day care, and family development and counseling to help families achieve selfsufficiency.
Beyond individual projects, states are also developing programs to combine
state, federal, and local resources to address local redevelopment challenges on a
comprehensive, statewide basis. For example, Kentucky has created “Renaissance
Kentucky,” an alliance of four state agencies, the League of Cities, the Federal Home
11
Loan Bank, and private organizations, to concentrate resources to revitalize
downtowns.
Renaissance Kentucky focuses state government expertise and local, federal, and
state funding on participating cities, creating easier access to program funding,
encouraging preservation of unique downtown and historic buildings, creating
housing, and developing local economies. In three years, it has allocated nearly $40
million in federal and state funding on specific projects in 72 communities.
To foster regionally focused housing and economic development funding
decisions, Minnesota helps fund and uses regional continuum of care plans to ensure
that priority needs are identified at the regional and local level and that state funding
decisions help implement those priorities. It evaluates proposed projects against
regional investment guidelines developed jointly by the state and local governments.
To meet critical local housing needs and fund priority local projects, the state
negotiates with communities about top priorities, attempts to structure larger, more
flexible, less categorical development funding programs, and gives priority to projects
implementing a broadly developed local plan which covers more than just housing and
demonstrates local commitment by leveraging funds from local businesses and
governments, including regulatory relief that helps reduce costs.
Even efforts as broad-based as Kentucky’s and Minnesota’s, however, face a
problem hobbling state, local, and private community redevelopment efforts
everywhere in the country. Real devolution would permit states to eliminate
unnecessary regulatory complexities among housing programs. Substantial sources of
funding for local redevelopment would, however, still remain practically beyond reach.
They are either based on individual entitlement, such as Medicaid, welfare funds, or
other special qualification or condition that were not designed to be concentrated in
particular neighborhoods or communities needing redevelopment and so cannot be
effectively aggregated to help redevelop particular areas. Moreover, each program has
its own state or federal (or both) administering agencies, eligibility standards, funding
cycles, priority allocations, program requirements, and application, compliance, and
waiver processes.
Even though federal program waivers are possible in particular cases, that
process is time-consuming, costly, must be pursued separately with each federal
agency, and is uncertain of result. Even a potentially successful result may not come in
time to be practically available to the development to which it may be key part. This
jungle of complexity makes accessing state and federal funds, which were never
designed to frustrate place-based community development, have that precise effect.
The time, cost, and luck required to access such resources successfully and in time to be
12
useful in such a system raises development costs, discourages efforts to try, and limits
outcomes in successful efforts.
The challenge is to facilitate combining the many separate federal funding
streams for housing and related assistance, in order to provide not only housing, but
also the essential commercial development, health facilities, education improvement,
job training, transportation to connect workers with jobs, law enforcement, and other
services, essential to specific and successful rural and urban community development
projects. The problem is that, while all of these programs were designed to improve the
quality of life in a community, few were designed to be accessed together to accomplish
comprehensive development initiatives in specific neighborhoods or communities.
Once more, effective federal delegation to state government provides the answer.
The Commission proposes that Congress authorize the governor of each state to set
aside a specific percent of federal categorical and block grant funds to that state for such
purposes as housing, health, transportation, welfare, education, law enforcement, and
job training, to finance comprehensive development of particular lower-income and atrisk neighborhoods under plans developed and approved by local government and the
state.
Such plans would provide for milestones and quantifiable results, include a
description of the local planning process and public participation in it, and provide for
independent third-party evaluation of the project. The governor would file such plans
and the basis for their state approval with the affected federal agencies, which would
have a period to comment upon, but not veto, the plan.
Governors should also be empowered to waive inconsistent program regulations
(other than requirements affecting all programs, such as Civil Rights) and to use the
funds as flexibly as projects require, provided funds from each category are used for the
general purpose (transportation, education, and so on) for which they were originally
provided.
To take advantage of such set-aside authority, a state should be required to
provide comparable ease of access to its own programs, whatever department
administers them. Participating localities should be required to do likewise.
Comprehensive redevelopment may involve not only a state and several of its
political subdivisions, but also two or more states in the case of some of the country’s
urban centers and significant rural localities. To encourage and facilitate such
development, Congress should consider creating additional incentives, such as
planning funds, for community development plans which states and their subdivisions
agree to undertake.
13
Conclusion
It is the 21st Century and time to have a housing delivery assistance system
worthy of it. The pathways of the dusty past are inadequate to the urgent present. The
federal failures in delivering housing assistance effectively demand that delivery be
truly devolved. The fracturing of federal assistance available into hundreds, even a
thousand, shares not only fails to address regional and statewide needs, but also
encourages isolated responses instead of state and local cooperation to deal with
housing needs on a statewide basis. The system for delivering federal housing
assistance should require cooperation between state and local governments and
marshalling of all available resources to meet needs most effectively wherever they are
most pressing in each state.
14